Alfred Sloan (1875-1966) was not only arguably the most original CEO and organisational thinker of the 20th century, but he was also clever enough to set his record down in a book that has become a management classic: “My Years with General Motors”, written with the help of John McDonald, an editor from Fortune magazine, and a rising young historian called Alfred Chandler.
Sloan studied electrical engineering at MIT before joining a small company that manufactured ball bearings. By the age of 24, at the dawn of the 20th century, he was already president of the company and steering it towards making anti-friction bearings for the then fledgling market for automobiles. Four years later the company, which had been close to bankruptcy, was making profits of $60m. Sloan was soon in close touch with many of the pioneers of the car industry, men such as Henry Ford and William Durant.
Before long his ball-bearing business became part of General Motors, and in 1923 (in the midst of a dire slump in the car industry) Sloan became president of GM. It was there that his reputation was made. He reorganised the company in a way that became the template for virtually every corporate entity for the rest of the century. He divided the company into separate autonomous divisions that were subject only to financial and policy controls from a small central staff.
This “federal decentralisation”, as he called it, is said to have taken only a month to set up, but its results were enduring and dramatic. Within six years the company had moved from being a laggard in the industry (way behind Ford with its famous Model T) to being the market leader with a turnover of $1.5 billion and a share price that had almost quintupled.
Sloan also introduced a systematic strategic planning procedure for the company's divisions, the first CEO ever to do such a thing. Each GM model was changed and updated annually, and models were designed not to compete with each other—a strategy that effectively made Sloan the inventor of the second-hand car market. His aim was to produce a car “for every purse and purpose”, unlike Ford, which stuck with its single model—understandably since, when Sloan took over at GM, Ford had some 60% of the market, compared with GM's 12%.
He was president of the company from 1923 to 1937, chief executive from 1923 to 1946, and chairman from 1937 to 1956, over 30 years with his hand effectively on the helm of one of the largest companies in the world. However, he was known as “Silent Sloan” to the company's workers because he preferred to run the business from behind the scenes. Management by walking about (see article) was not one of his methods. His management style is well illustrated by his famous summing up at the end of a GM senior executive meeting. “Gentlemen, I take it we are all in complete agreement on the decision here,” he started, and everyone nodded their heads in agreement. “Then,” he went on, “I propose we postpone further discussion of this matter until the next meeting to give ourselves time to develop disagreement, and perhaps gain some understanding of what the decision is all about.”
In his later years Sloan gave large sums of money to his alma mater, MIT, which in gratitude named its business school after him. He also helped fund the Sloan-Kettering Institute for Cancer Research in New York.
Notable publication
“My Years with General Motors”, Doubleday, 1964
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This profile is adapted from “The Economist Guide to Management Ideas and Gurus”, by Tim Hindle (Profile Books; 322 pages; £20). The guide has the low-down on more than 50 of the world's most influential management thinkers past and present and over 100 of the most influential business-management ideas. To buy this book, please visit our online shop.